A new grand jury could be
called to investigate an alleged
kickback scheme

By Rick Daysog
Star-Bulletin

The attorney general's office can reindict former Kamehameha Schools trustee Henry Peters and local developer Jeffrey Stone, a state judge ruled today.

Circuit Judge Michael Town dismissed charges against Peters and Stone without prejudice, meaning that the attorney general's office can convene a new grand jury to investigate an alleged kickback scheme involving the two.

Town, who threw out theft and accomplice-to-theft charges against Peters and Stone in December, said the state "seriously erred" by allowing jurors to hear testimony that should have been privileged. But Town said the prosecutors' actions did not amount to egregious misconduct.

"It's a very drastic remedy to dismiss with prejudice, and this court in good conscience cannot exercise its discretion to dismiss with prejudice," Town said.

Senior Deputy Attorney General Lawrence Goya said he would consult with Attorney General Earl Anzai before making a decision to seek new indictments.

The state has less than two weeks to reindict Peters and Stone under the statute of limitation for theft charges.

The Oahu grand jury previously indicted Peters for theft and Stone for commercial bribery and accomplice-to-theft for their role in a controversial 1995 Bishop Estate land deal in Hawaii Kai.

In return, Peters, a former state House speaker, gave a company affiliated with Stone favorable treatment when it purchased the fee interest to the 219-unit Kalele Kai condominium project in 1995.

Peters and Stone have denied wrongdoing, saying the Kamehameha Schools, formerly known as the Bishop Estate, benefited from the deal.

Town in December dismissed the charges, saying the grand jury heard improper testimony from the estate's former attorney Nathan Aipa. That dismissal came after Town threw out the same charges last year due to "illegally bolstered" testimony from Stone's former attorney Richard Frunzi. Frunzi is in prison after pleading guilty to money laundering.